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Product and

Service Design

McGraw-Hill/IrwinCopyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

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As Engineering

designed it.

1984-1994 T/Maker Co.

As Operations made it.

1984-1994 T/Maker Co.

As Marketinginterpretedit.

1984-1994 T/Maker Co.

As thecustomerwanted it.

1984-1994 T/Maker Co.

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The essence of an organization is the goods and services it offers Every aspect of the organization is structured around them

Product and service design/redesign should be closely tied to an

organizations strategy

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1. Translate customer wants and needs into product and service

requirements

2. Refine existing products and services

3. Develop new products and services

4. Formulate quality goals

5. Formulate cost targets

6. Construct and test prototypes

7. Document specifications

8. Translate product and service specifications intoprocessspecifications

9. Involve Inter-functional Collaboration 4-4

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The driving forces for product and service design orredesign are market opportunities or threats:

Cost or Availability (alternative materials - opportunity)

Economic (low demand - threat)

Competitive (newly introduced features by competition)

Social and Demographic

Political, Liability, or Legal

Technological

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1. What level of quality is appropriate? (idea generation) Customer expectations Competitor quality Fit with current offering

2. Is there a demandfor it?

Market size Demand profile

3. Can we do it? Manufacturability- the capabilityof an organization to produce an

item at an acceptable profit Serviceability- the capabilityof an organization to provide a service

at an acceptable cost or profit

4. Does it make sense from an economic standpoint? Liability issues, ethical considerations, sustainability issues, costs and

profits

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Ideas can come from anywhere in the supplychain: Customers

Suppliers (components/materials knowledge)

Distributors (closer to customers)

Employees (skill)

Maintenance and repair personnel (ease of repair)

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By studying how a competitor operates and itsproducts and services, many useful ideas can begenerated

Reverse engineering Dismantling and inspecting a competitors product to

discover product improvements

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Research and Development (R&D) Organized efforts to increase scientific knowledge or product

innovation Basic research

Has the objective of advancing the state of knowledge about asubject without any near-term expectation of commercialapplications

Applied research Has the objective of achieving commercial applications

Development Converts the results of applied research into useful commercial

applications.

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Legal Considerations Product liability

The responsibility a manufacturer has for any injuries ordamages caused by as faulty product

Some of the concomitant costs Litigation Legal and insurance costs Settlement costs Costly product recalls Reputation effects

Uniform Commercial Code Under the UCC, products carry an implication of

merchantability and fitness

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Designers are often under pressure to Speed up the design process

Cut costs

These pressures force trade-off decisions What if a product has bugs?

Release the product and risk damage to your reputation

Work out the bugs and forego revenue

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Depending on the nature of product/industry, life of a product (product design) differs.

Ex. Lifetime of a car model is typically around 6 years.

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Negativecash flow

Introduction Growth Maturity Decline

Sales,cost,andcashflow

Cost of development and production

Cashflow

Net revenue (profit)

Sales revenue

Loss

Figure 5.1

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Introduction

Fine tuning may warrant unusual expensesfor

Research

Product development

Process modification and enhancement

Supplier development

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Growth

Designstabilizes Effective forecasting of capacityis necessary

Adding or enhancingcapacitymay be necessar

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Maturity

High volume, innovative production may be needed

Improved costcontrol, reduction in options, paringdown of product line

Competitorsnow established

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Decline

Unless product makes a specialcontribution to the organization,must plan to terminateoffering

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Sustainability Using resources in ways that do not harm ecological systems that

support human existence

Key aspects of designing for sustainability

Cradle-to-grave assessment (Life-Cycle assessment) End-of-life programs

The 3-Rs Reduction of costs and materials used

Re-using parts of returned products

Recycling

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Cradle-to-Grave Assessment aka Life-Cycle Assessment (LCA) The assessment of the environmental impact of a

product or service throughout its useful life

Focuses on such factors as Global warming Smog formation Oxygen depletion Solid waste generation

LCA procedures are part of the ISO 14000 environmentalmanagement procedures

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http://www.iso.org/iso/iso_14000_essentialshttp://www.iso.org/iso/iso_14000_essentialshttp://www.iso.org/iso/iso_14000_essentials

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EOL programs deal with products (business and

consumer) that have reached the end of their useful lives

The goal of such programs is to reduce the dumping orincineration of products (e.g., electronics) which maypose hazards to the environment

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Value analysis Examination of the function of parts and materials in an effort

to reduce the cost and/or improve the performance of a product

Common questions used in value analysis Is the item necessary; does it have value; could it be eliminated?

Are there alternative sources for the item?

Could another material, part, or service be used instead?

Can two or more parts be combined?

Can specifications be less stringent to save time or money?

Do suppliers/providers have suggestions for improvements?

Can packagingbe improved or made less costly?

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Remanufacturing

Refurbishingused products by replacing worn-out or defectivecomponents Can be performed by the original manufacturer or another company

Reasonsto remanufacture:a. Remanufactured products can be sold for about 50% of the priceof

a new productb. The process requires mostly unskilledand semi-skilledworkersc. In the global market, European lawmakersare increasingly

requiring manufacturers to take back used products

Design for disassembly (DFD) Designing a product to that used products can be easily taken apart

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Recycling

Recovering materials for future use Applies to manufactured parts Also applies to materialsused during production

Why recycle?a. Cost savingsb. Environmental concernsc. Environmental regulations

Ex. Companies doing business in the European Union must show

that a specified proportion of their products are recyclable

Design for recycling (DFR) Product design that takes into account the ability to

disassemble a used product to recover the recyclable parts

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Standardization Mass customization (Delayed Diff., Modularity)

Reliability

Robustness

Degree of newness

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Standardization Extent to which there is an absence of variety in a

product, service, or process Products are made in large quantities of identical items

Every customer or item processed receives essentially thesame service

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Advantages1. Fewer parts to deal with in inventoryand in manufacturing2. Reduced trainingcosts and time3. More routinepurchasing, handling, and inspection procedures4. Orders fillable from inventory

5. Opportunities for long production runs and automation6. Need for fewer parts justifies expenditures on perfecting designs and

improving quality control procedures

Disadvantages

1. Designsmay be frozenwith too many imperfections remaining.2. High cost of design changes increases resistance to improvements3. Decreased variety results in lessconsumerappeal

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Mass customization A strategy of producing basically standardizedgoods

or services, but incorporating some degree ofcustomizationin the final product or service

Facilitating Techniques Delayed differentiation

Modular design

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Delayed Differentiation The process of producing, but not quite completing, a

product or service until customer preferences areknown

It is a postponement tacticEx. Produce a piece of furniture, but do not stain it; the customerchooses the stain

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Modular Design A form of standardization in which component parts are grouped

into modulesthat are easily replaced or interchanged Advantages

easier diagnosis and remedy of failures

easierrepairand replacement

simplification of manufacturing and assembly

training costs are relatively low

Disadvantages

Limitednumber of possible product configurations

Limitedability to repair a faulty module; the entire module mustoften be scrapped

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Reliability The ability of a product, part, or system to perform its

intended function under a prescribed set of conditions Failure

Situation in which a product, part, or system does not perform as

intended Reliabilities are always specified with respect to certain

conditions Normal operating conditions

The set of conditions under which an items reliability is specified Ex: Acceptable temperature of operation for laptops

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Robust design A design that results in products or services that can

function over a broad range of conditions The more robust a product or service, the less likely it will

fail due to a change in the environment in which it is used orin which it is performed

Pertains to product as well as process design Consider the following automobiles:

Ferrari Enzo Toyota Avalon

Which design is more robust?

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Product or service design changes: Modificationof an existing product or service

Expansionof an existing product line or service offering

Cloneof a competitors product or service

Newproduct or service

The degree of change affects the newness of theproduct or service to the market and to theorganization Risks and benefits?

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1. Feasibilityanalysis2. Productspecifications

3. Processspecifications

4. Prototypedevelopment

5. Design review6. Market test

7. Product introduction

8. Follow-up evaluation

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Service Something that is done to, or for, a customer

Service delivery system The facilities, processes, and skills needed to provide a

service Product bundle

The combinationof goods and services provided to acustomer

Service package The physical resources needed to perform the service,

accompanying goods, and the explicit (core features)and implicit (ancillary features) services included

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Begins with a choice of service strategy, whichdetermines the nature and focus of the service, andthe target market Key issues in service design

Degree ofvariationin service requirements Degree of customer contact and involvement

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1. Products are generally tangible, services intangible

2. Services are created and delivered at the same time

3. Services cannot be inventoried

4. Services are highly visible to consumers

5. Some services have low barriers to entry and exit

6. Location is often important to service design, with convenienceas a major factor

7. Service systems range from those with little or no customer

contact to those that have a very high degree of customercontact

8. Demand variability alternately creates waiting lines or idleservice resources

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